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Realizing operational excellence

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Often times when we meet business leaders, our discussions end up on the topic of how to improve their business operations. They quickly want to know how digitization, robotic process automation (RPA), the Internet of Things (IoT) or business process reengineering (BPR) could transform their business to become more customer-focused, efficient and effective. While these innovations could produce great gains in any organization, they represent only one side of the coin. The flip side is that employee behaviors play a substantial role in an organization’s productivity and effectiveness. It is rather unfortunate that 90% of leaders fail to recognize this.

No amount of investment in technology can replace the investment in developing the right behaviors in an organization’s most valuable asset — the people. Business leaders can digitize all their forms and correspondence but people are still required to execute and complete the work. You can transform some of your processes with RPA but you will always need a person to determine that your “bots” are doing what they were designed to be doing. You can connect all your areas to the Internet and the cloud and get data anytime and anywhere but you will still need a person who will turn the data into useful information for business decision and business execution. BPR is only as effective as the people who manage the new process.

A lot of business leaders miss this and fail to recognize that behavioral transformation is a critical enabler for any technological or process transformation. When you want business transformation, you essentially fix the process in such a way that it influences the people culture that aligns the focus of each milestone with measurable results.

Hence, people development is not just an HR topic to address but also an operational issue to solve. An effective Operational Excellence(OE) program must focus on how to change the way operations are managed while adapting to business trends. Additionally, the OE program should address how to manage fluctuating demands while managing the business-as-usual process. A true OE program must employ a people-based approach, which is designed to meet the urgent demands of today’s digital-age customer whilst aligning with the expectations of a modern workforce. As a result, employees can visualize the business priorities, espouse what change to seek and develop the necessary coaching culture required of a change in the organizational business model. We believe that operational improvement comes where the culture is transformed in a way that stops a mistake from happening again and where leaders have enough insights that enable them to spend quality time on staff coaching and employee development.

Improving operational performance can be done by introducing an OE management system that drives new behaviors to achieve a step change in operational effectiveness and efficiency. This system is an operational excellence approach that optimizes what managers do, how they do it, and the tools they use. This system is not simply about driving down cost — it is about improving productivity, with a relentless focus on customer and business outcomes. This provides organizations the capacity to grow through their people in a short period. It accelerates cost reduction and capacity release, averaging around 15%-28% in additional savings from continuous improvements. Within a short time, the cycle of productivity improvement is accelerated as the system builds leadership and management capabilities whilst providing leaders with the right tools and techniques to run effective operations. The new OE management system enables leaders to spend more time coaching employees — a welcome improvement seeing as only 11% of time is spent on it. This allows leaders to gain better insights on problem areas and helps them to develop a culture of celebrating success, ultimately resulting in a committed work force that delivers lasting change. Furthermore, it improves staff engagement by elevating the capabilities of teams and empowering staff with positive routines and habits. It also develops nimble organizations by improving communication, operational control, coaching and learning.

Improving operational performance primarily focuses on 10 elements in an organization. Influencing these 10 elements will assist the organization in envisioning the changes necessary to enhance capacity while enforcing global best practices and leading industry standards. Additionally, it shifts the operating rhythm of the organization towards one that focuses on developing the coaching culture. In conclusion, an effective OE management system will help bring the organization’s focus towards enhancing process standardization by making priorities clear to manage fluctuating demands. This also increases the customer experience as it improves service levels and decreases errors and rework. Often, organizations embarking on effective OE journeys have seen improvements in their net promoter score ratings.

Whether you have a Finance function spread across multiple locations and divisions (with disparate processes and systems) or one that is part of multiple processing departments in a global organization, an effective operational excellence management system can make organizational changes stick and deliver consistent improvements.

When you put an engaged and empowered work force at the core of an operational improvement or business transformation initiative, you will see the magic of a work force that realizes the anticipated benefits, delivers the results and drives the continuous improvement culture.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of PricewaterhouseCoopers Consulting Services Philippines Co. Ltd. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Victor Gabriel Ona, a senior manager, and Snigdha Verma, a manager, are members of the Operations Consulting Practice of PricewaterhouseCoopers Consulting Services Philippines Co. Ltd., a Philippine member firm of the PwC network.

+63 (2) 845-2728 local 3230/3240

victor.gabriel.ona@ph.pwc.com

verma.snigdha@ph.pwc.com